How to Add and Remove 5% VAT in the UAE (With Examples)

The UAE introduced VAT on 1 January 2018 at a standard rate of 5%, according to the Federal Tax Authority.

Adding VAT to a price

Multiply the price before VAT by 1.05.

Example: a service costs AED 1,000 before VAT.

• VAT: 1,000 × 0.05 = AED 50
• Total: AED 1,050

Taking VAT out of a total

Divide the VAT-inclusive total by 1.05. This is where people go wrong: they subtract 5% from the total, which gives the wrong answer.

Example: you paid AED 1,050 including VAT.

• Price before VAT: 1,050 ÷ 1.05 = AED 1,000
• VAT: 1,050 − 1,000 = AED 50

If you subtracted 5% from 1,050 you would get 997.50, which is AED 2.50 too low, because VAT was charged on the lower price, not on the total.

Zero-rated and exempt supplies

Most goods and services carry 5%, but some are zero-rated (for example certain exports and international transport) and some are exempt (for example some financial services and residential property). The rate that applies depends on the supply, so check the Federal Tax Authority’s guidance for yours.

When must a business register?

Registration is mandatory if taxable supplies and imports exceed AED 375,000 over the previous 12 months or are expected to in the next 30 days. A business can register voluntarily if it exceeds AED 187,500 (Federal Tax Authority).

Calculate it

The VAT calculator adds or removes VAT from any amount and lets you change the rate.

Official source: Federal Tax Authority

Checked against the Federal Tax Authority’s published information on 1 October 2026. General information, not tax advice.